Produced by Phoenix Net New Vision
Author | Su Mu
Edit | Ren Qing
Core tip:
1.The pressure on Xiaomi’s mobile phone business in the first quarter was more affected by objective factors such as low-end chip gap, geopolitics in Europe and repeated domestic epidemics.. Hu Qimu, chief researcher of Sinosteel Economic Research Institute, believes that despite the repeated epidemic and the situation in Europe, the income from Xiaomi’s main business has not changed much.
2. In terms of market share, Xiaomi’s mobile phone business is basically stable, and the strategic effect of high-end mobile phones has begun to appear. Canalys data shows that in the first quarter of 2022, Xiaomi mobile phone ranked third in the world, and the domestic market also ranked in the top five. The domestic smartphone market share in the price range of 4,000-6,000 yuan ranks first among Android smartphone manufacturers.
3. Xiaomi IoT and consumer goods are growing well. In the first quarter, the revenue of Xiaomi’s IoT and consumer goods business was 19.477 billion yuan, up 6.8% year-on-year, and the gross profit margin was as high as 15.6%, which was the highest in a single quarter.Around smart phones, Xiaomi’s AIoT business can build a more perfect intelligent life experience, which is the most imaginative part of Xiaomi’s future development.
four.The scale of users is the moat of Internet services. In the first quarter, the monthly activities of Xiaomi MIUI and the number of smart TVs exceeded 500 million and 50 million respectively. With the ecological development of Xiaomi, the hardware advantages and huge user base may become the reversal point of Xiaomi.
After the close of trading on May 19, 2022, Xiaomi Group (1810.HK) released its financial report for the first quarter of 2022, achieving revenue of 73.352 billion yuan; The adjusted net profit was 2.859 billion yuan.
This is a performance that doesn’t look very bright. Under the influence of objective factors such as the shortage of core components, the repeated COVID-19 epidemic and the turmoil in the international situation, Xiaomi’s revenue and net profit decreased in line with market expectations.
Due to the bad news in the previous period, after the disclosure of Xiaomi Q1 financial report, the share price rebounded the next day, rising by 6%, with a turnover of HK$ 1.535 billion.
Compared with the short-term performance fluctuation of Xiaomi, the market pays more attention to the long-term value conveyed by this financial report. The day after the financial report was released, 42 analysts from Bloomberg gave Xiaomi a "buy" rating.
Although the mobile phone business is still the most important business of Xiaomi for a long time, Xiaomi does not want to define itself as a mobile phone manufacturer, but also wants to become a service provider in the fields of smart home integration and artificial intelligence Internet of Things.
This is Xiaomi’s "open plan", which gains customers through hardware sales such as mobile phones. In Lei Jun’s words, it is "making friends", and then it is realized through Internet services and IoT and consumer goods sales.
Regarding Xiaomi’s performance and future expectations this quarter, Hu Qimu, chief researcher of Sinosteel Economic Research Institute, and many other industry experts said in an interview with Phoenix Net Technology that Xiaomi’s main business income has not changed much, and there are many growth highlights in high-end strategy, AIoT and overseas business.Short-term fluctuations do not affect long-term value.
Xiaomi’s high-end strategy has achieved results.
Xiaomi’s revenue is mainly divided into three parts, namely smart phones, IoT and consumer goods, and Internet services. In the first quarter of 2022, Xiaomi’s total revenue reached 73.4 billion yuan. From the perspective of revenue structure, the proportion of these three major businesses has not changed much. The smartphone business achieved revenue of 45.8 billion yuan, and the revenue still accounted for more than 60%.
However, the Xiaomi smartphone business is under pressure. In the first quarter of 2021, the shipment of Xiaomi smartphones was 49.4 million units, while in the first quarter of 2022, the shipment of Xiaomi smartphones was only 38.5 million units, which sold more than 10 million units less than the previous quarter and decreased by 22.1% year-on-year.
In this regard, Liu Jingzhao, an overseas team analyst of CITIC Jiantou, told Phoenix Net Technology.The pressure on Xiaomi’s mobile phone business in the first quarter was more affected by objective factors such as low-end chip gap, geopolitics in Europe and repeated domestic epidemics..
At the earnings conference call, Wang Xiang, president of Xiaomi Group, also said that the epidemic had an impact on Xiaomi’s production, sales, logistics and offline stores. At the same time, there was a shortage of low-end chips in the first quarter, which also affected mobile phone sales to some extent. Wang Xiang revealed that the shortage of mobile phones caused by the lack of low-end chips is about 10 million.
The sluggish mobile phone market is a common problem in the industry.. According to Canalys data, in the first quarter of 2022, global smartphone shipments reached 311.2 million units, down 11% year-on-year. Chinese mainland’s smartphone market continued to lag behind the global market, with only 75.6 million units shipped, down 18% year-on-year and 13% quarter-on-quarter.
Not only the mobile phone market, but also the entire consumer market has been affected by the short-term impact of the epidemic, and consumer demand has dropped significantly. Fu Jiaqi, statistician of the Department of Foreign Trade and Economic Cooperation of the National Bureau of Statistics, said that the expansion of household consumption scale and the upgrading of consumption structure will not change. With the effectiveness of epidemic prevention and control, consumer demand will continue to be released.The consumer market is expected to continue to resume growth..
Although the domestic market environment is bleak, Xiaomi’s mobile phone business benefited from the high-end strategy and overseas market efforts, which offset the decline in revenue caused by the supply gap of low-end machines.
Hu Qimu, chief researcher of Sinosteel Economic Research Institute, told Phoenix Net Technology.Although the repeated epidemic and the situation in Europe have disrupted the mobile phone supply chain, raised costs and suppressed shipments, Xiaomi is not yet hurt, and the income from its main business has not changed much..
In terms of market share, Xiaomi’s mobile phone business is basically stable.. Canalys data shows that in the first quarter of 2022, Xiaomi mobile phone ranked third in the world, and the domestic market also ranked in the top five.
The effect of Xiaomi’s high-end strategy has also begun to appear.The global shipment of high-end smartphones with a domestic price of more than 3,000 yuan and a foreign price of more than 300 euros is nearly 4 million units, which directly drives ASP to increase by 14.1% year-on-year, ranking first among Android smartphone manufacturers in the smartphone market share of 4,000-6,000 yuan.
On May 23rd, Xiaomi Guanxuan cooperated deeply with Leica, a famous German camera brand, saying that they would devote themselves to the exploration in the field of mobile phone imaging, saying that the two sides would focus their technology and R&D teams together to jointly explore breakthrough and innovative solutions in the mobile field. This is also Xiaomi’s efforts in mobile photography again after the establishment of the mobile movie studio. The accumulation of Xiaomi image in hardware has reached a certain height in recent years. This strategic cooperation with Leica can be said to be a further "critical moment" for Xiaomi’s high-end strategy.
Xiaomi’s core competitiveness is ecology.
Compared with the pressure on the mobile phone business, Xiaomi’s IoT and consumer goods grew well in the first quarter. In the first quarter, the revenue of Xiaomi IoT and consumer goods business was 19.477 billion yuan, up 6.8% year-on-year, accounting for 26.6% of the total revenue, and the gross profit margin was as high as 15.6%.Set a record high in a single quarter..
Hu Qimu, chief researcher of Sinosteel Economic Research Institute, told Phoenix Net Technology.Global mobile phone shipments have been declining since 2016, and there is not much room for growth in this market.The increment must come from Xiaomi’s IoT ecology and new retail..
"In fact, all mobile phone brands will take this route in the future. Because in the Internet of Things era, the mobile phone is only one of the terminals.Internet integration and service ability behind intelligent terminals are the core competitiveness of enterprises.. Hu Qimu said, "The industrial chain in the field of Internet of Things is very broad. From hardware such as chips, sensors and intelligent terminals to software such as systems and platforms to integrated services, many enterprises only do part of it.Xiaomi is one of the few enterprises with ecological ability.. "
The core competitiveness of Xiaomi lies in ecology.Yan Jinhua, a researcher at the Digital Economy Research Center of Zhongjing, told Phoenix Net Technology that on the one hand, the Xiaomi ecological chain is open, free to come and go, and full of competition, and a market-based elimination mechanism has been established to ensure the continuous improvement of the product strength of ecological partners; On the other hand, the unique advantages of Xiaomi’s business model enable partners to empower each other and save the loss of each link through intensive expenses.It has strong economies of scale..
Since 2018, in order to adapt to the rapid development of the IoT industry, Xiaomi has proposed "AI+IoT" and "All in IoT" to "Mobile Phone+AIoT" and then to "Mobile Phone XIAOT".
In Lei Jun’s plan, the core business of mobile phones and the ecological layout of AIoT are "equations that can cause the transformation of quality and energy". Mobile phone is always the core business of Xiaomi, which is related to the success or failure of Xiaomi’s business and the cornerstone of Xiaomi’s business model. The core strategy of "mobile phone ×AIoT" emphasizes multiplication effect, making AIoT ecology a catalytic combustion improver for mobile phone business and a moat for Xiaomi business model.
From the perspective of the industry, the core driving force of IoT is closely related to the changes in social consumption structure. With the post-90s and post-00s stepping into the society and family life, the age of social consumption structure has changed, and the consumption concept driven by these young people will lead to the rise of a number of IoT industries.
Liu Jingzhao, an overseas team analyst of CITIC Jiantou, believes that the long-term development of the IoT industry has two major directions: one is 2B, such as deeper cooperation with hotels, shopping malls and real estate companies; The other is the whole house intelligence. Nowadays, young people want to decorate their houses with intelligent hardware products with central control. Driven by these two directions,The IoT industry has long-term and sustainable growth capabilities..
Liu Jingzhao analyzed, "In the short term, the IoT industry will be very flexible, and there will be an influx of fresh blood; But in the medium and long term, with the continuous maturity of technology, the importance of ecology will certainly be reflected. For example, we will continue to add smart homes at home, but we certainly don’t want to install an APP for sweeping robots, air conditioners and washing machines, but we prefer to control them through a central control platform. theseThe end of small household appliances enterprises must join a certain ecology.. At present, there are very few enterprises that can do ecology, only a few such as Xiaomi, Huawei and Baidu. "
Thanks to the collaborative strategy of mobile phones and AIoT, as of March 31, 2022, the number of Xiaomi AIoT connected devices (excluding smartphones, tablets and laptops) reached 478 million, a year-on-year increase of 36.2%. The number of users with five or more devices connected to Xiaomi AIoT platform reached 9.5 million, up 38.7% year-on-year. In March 2022, the number of monthly users of Xiaoai classmates increased by 23.9% year-on-year to 115 million, and the number of monthly users of Mijia App increased by 33.8% year-on-year to 65.8 million.
Around smart phones, Xiaomi’s AIoT business can build a more perfect intelligent life experience, which is the most imaginative part of Xiaomi’s future development.
The number of monthly MIUI users exceeded 500 million, up 100 million year-on-year.
The biggest advantage of Xiaomi is that it occupies the hardware traffic entrance. While major Internet companies are dealing with new policies on data security and personal information protection, online advertising business has been affected by rectification, butWith the advantage of hardware, Xiaomi has achieved a wave of rapid growth against the trend, which shows how solid the hardware foundation of Xiaomi is.
The financial report shows that Xiaomi’s Internet service business has maintained steady growth. In the first quarter, Xiaomi’s Internet service revenue reached 7.113 billion yuan, up 8.2% year-on-year, accounting for 9.7% of the total revenue, up 1.2% over the same period in 2021.
It is worth noting that Xiaomi’s overseas Internet business is the fastest growing. In Q1, 2022, Xiaomi’s overseas Internet business revenue reached RMB 1.6 billion, up 71.1% year-on-year, and its share in the overall Internet service revenue continued to rise to 21.9%, a record high.
Yan Jinhua, a macroeconomic researcher at the China Economics Digital Economy Research Center, told Phoenix Net Technology that Xiaomi’s overseas business will inevitably surpass its domestic business in the future. The orderly expansion of overseas markets can not only meet the needs of domestic industrial structure optimization and upgrading, but also open up the demand of high-quality users to grow in the blue ocean, open up the customization of high-end Internet service products in Europe, establish mobile phones and advertising and game business lines in Southeast Asia and Latin America, and Xiaomi’s international business product line will become more and more clear.
In addition, as of March 2022, the number of monthly active users of Xiaomi’s global MIUI reached 529 million.An increase of 104 million year-on-year. Chinese mainland MIUI has 136 million monthly active users, up 17 million year-on-year. The number of monthly users of MIUI in China has increased month-on-month for six consecutive quarters.
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